Saturday, March 29, 2014

"They don’t want any bank to start the liquidation process because that’s when we find out what things are really worth, and they are not going to be worth anything compared to what the banks have on the books.

So the big time bomb is derivatives and leverage in the banking system. We keep getting these comments out of Europe that some country has got to raise $25 billion to boost the capital of the banks. This is in an environment where the paper assets have been allowed to appreciate. Imagine a situation where they start depreciating.

The leverage is just way too high and to me that’s always been the lingering huge fear. We could throw in wars, continuing economic decline, which I think we are having, but a bank collapse would be by far the biggest item in terms of how it would affect the financial markets, and in particular in how it would just blow interest into the precious metals area."

Thursday, March 27, 2014

"The biggest danger is that the financial system is over-levered. And perhaps at this point I might even mention one of the most ludicrous things I’ve ever seen....

It was suggested by the Bank of England that should an important bank not be able to meet its derivative demands because it has a losing position, that claims on that bank be suspended -- that entities wouldn’t be allowed to make a claim on those derivative losses.

It’s like being in a fantasy land. You lose money, but you are not allowed to claim from the guy because he could go down. Of course I know the reason they don’t want anybody to go down: Ever since Lehman Brothers they’ve abandoned the word ‘liquidation’ because they saw what a liquidation could do."

Sunday, March 23, 2014

“We are going to get the 50-day (moving average) going through the 200-day (moving average) soon. I bet it’s within 5 days that it will go through just based on the trend it’s on. It has to go through because the trend is up in the 50-day, and on the 200-day it’s just kind of flattening out here.

So we are going to have the ‘Golden Cross’ probably sometime next week, which I think will bring lots of guys in from the sidelines who realize that a new bull market has started because there is no better sign than the Golden Cross. I think the lack of manipulation going forward is (also) going to be a very important item for people to think about in terms of where gold should go throughout this year.”

Friday, March 21, 2014

I think we’re pretty strident in our views about what’s going on in the world economy. When I think of all the partners that I have, whether it’s Rick Rule, John Embry, Marc Faber (who’s on our board), we’ve all been very outspoken about what’s going on in the financial system.

I don’t want to put words in everyone’s mouth, but I would generally say we think of it as a Ponzi scheme or as Rick Rule would call it, “counterfeiting of money,” and so we’re looking for ways to survive that situation. I think that’s what we bring to clients. We’re willing to believe in ourselves and not withstanding for example the huge declines that we’ve experienced in precious metals in the last two years. We’re still staying the course because obviously we think when we come out of this and all the truth is known, that that’s the place to be in the financial situation we find ourselves.

Wednesday, March 19, 2014

"We’ve had many articles in Bloomberg, Reuters, the Financial Times, and others, about manipulation. I think more and more writers are taking it seriously because most everything that’s been suggested was manipulated, proves to be manipulated, and I don’t think gold will be an exception.

What this has caused to happen is the price of gold, from a manipulation point of view, has been released. You don’t see the sell offs that we’ve had before because the manipulators know they are being watched. I’m sure all of the internal audit departments of those banks are all over trying to figure out what their boys were doing to try to limit the size of the lawsuits.

So I think gold has very much had the ceiling taken off of it (in terms of price). Had there been no manipulation we should be at $2,100 gold today and we should be at $2,400 gold by the end of the year."

Monday, March 17, 2014

“I think it’s very important that your listeners (and readers) understand exactly the chronology and the depth of the investigation into the manipulation that’s gone on (in the gold market). It got a bit of a head of steam when the German regulator came out and said that they were going to investigate the LBMA....

And then in the middle of December they investigated Deutsche Bank. On January 17th the (German) regulator came out and said it was possible the manipulation of the gold market could be worse than LIBOR.

But what’s happened in the last couple of weeks is we’ve had some lawsuits filed, and one of the lawsuits was filed by a legal firm that I had been in touch with a couple of weeks earlier. This law firm was the co-lead law firm in the LIBOR scandal. I’m sure they will be involved in the Forex scandal as well.

They’ve hired on a group that’s done all the investigative work on the previous scandals. So this is a serious investigation in terms of generating prima facie evidence of manipulation. I don’t think this is going to go away -- it’s going to get bigger."

Saturday, March 15, 2014

Eric Sprott, CEO of Sprott Asset Management, is bullish on gold in 2014. Sprott says, "On a linear trend line, gold should be $2,100 right now . . . and if you throw on another 15%, you are looking at gold at $2,400 by the end of the year."

On the possibility of a Ukraine/Russia war, Sprott says, "There are two fears. One is war, which would be just devastating for everybody. The other fear is there could be a financial domino fall away from this. Perhaps the banks in the Ukraine, which are already facing tremendous strains because of demands on deposits, fail, and because somebody else is invested with that bank, they end up with a problem. . . . . War could certainly cause a financial domino, but we could have a domino without war. There's a huge bank run going on in Ukraine. The currency is crashing. The ruble is crashing. It is surprising how far all these currencies have gone down. We also experienced a huge decline in the value of the dollar . . . it fell half of one percent in one day."

Join Greg Hunter as he goes One-on-One with $8 billion fund manager Eric Sprott. Eric Sprott, CEO of Sprott Asset Management, is bullish on gold in 2014. Sprott says, "On a linear trend line, gold should be $2,100 right now . . . and if you throw on another 15%, you are looking at gold at $2,400 by the end of the year."

On the possibility of a Ukraine/Russia war, Sprott says, "There are two fears. One is war, which would be just devastating for everybody. The other fear is there could be a financial domino fall away from this. Perhaps the banks in the Ukraine, which are already facing tremendous strains because of demands on deposits, fail, and because somebody else is invested with that bank, they end up with a problem. . . . . War could certainly cause a financial domino, but we could have a domino without war. There's a huge bank run going on in Ukraine. The currency is crashing. The ruble is crashing. It is surprising how far all these currencies have gone down. We also experienced a huge decline in the value of the dollar . . . it fell half of one percent in one day."

Thursday, March 13, 2014

The silver price is grotesquely undervalued so I have to congratulate JP Morgan if they are clever enough to sell paper and buy real silver. Before this is over, there is probably going to be a ‘force majeure’ in the paper market because there are so many claims to such a small amount of silver. If that were to occur, people who owned the metal or even exchange-traded products that have a real claim to the metal would be the big winners.

When this comes to light, I think the upside to the silver price will be incredible. My colleague Eric Sprott and I think that within a reasonable timeframe silver will probably trade over 100 dollars – a big move from its current price of 20 dollars an ounce.

Tuesday, March 11, 2014

The year 2013 was a forgettable one for gold investors as they watched the precious metal sink 27% after a remarkable bull run lasting nearly a decade. When prices reached $1,200 levels some time last year, most experts predicted that the gold rally was over.

So far this year, those predictions have not turned out to be exactly right. Gold has managed to buck the trend, rising 10.4% year to date as emerging market economic weakness combined with rising geopolitical tensions revived its status as a safe haven.

Gold investor and strategist Eric Sprott, who has steadfastly refused to buy the theory of erosion of investor faith in precious metals, and has instead alluded to central bank manipulation as the reason behind the 2013 price fall (read his post at www.zerohedge.com on January 17), is today more bullish than ever about gold. "The price of gold and silver will both hit new highs in 2014," he said in a blog post on January 9. "The price of gold goes north of $2,000, and silver will quickly go over $50. When it does, it will get a little crazy."

Sunday, March 9, 2014

I think the secret to success is being an analyst, recognizing value, wanting to buy things that can go up a very large amount. I always thought I will never buy a stock unless I think it can go up at least 100% within the first two years. Of course opportunities do come along where you can imagine, “Well, this could go up 1000% or 2000%,” because you’re really early.

It’s interesting that we just talked about situations where I’m imagining the stock could go up 2000% here. That’s the sort of thing I’m looking for and it’s not an easy path because some of the companies don’t do as well as you expect. Some economic developments come along that affect how people treat the stock market. But when it wins, it’s such a huge payoff that it’s not that difficult to increase your wealth exponentially and I think maybe that’s the reason my wealth has increased exponentially.

Friday, March 7, 2014

There have been some very interesting developments in the precious metals markets. I would say the most interesting one is the fact that the equivalent to the SEC in Germany, the acronym is BaFin, came out on – I think it was January 17th, and said that the main regulator said that, precious metals are manipulated worse than LIBOR and that word “worse” is a very significant word in my mind.

Then when you think about some of the chronology for BaFin, they announced in the middle of November that they were going to investigate the possible fixing of gold prices or manipulating of gold prices on the London gold fix.

In the middle of December, they were said to have gone into Deutsche Bank’s offices to review their trading records. As I’ve said on January 17th, the head of that regulator said that it’s worse than LIBOR and on the next day, Deutsche Bank declined to continue being a member of the fixing of the London bullion market. When you think about what must have happened, my own feeling is that the regulator probably went back to Deutsche Bank having looked at their records and said, “Do you know what your boys in London have been doing here?” And of course the next day they quit the LBMA.

Then when I reflect on that regulator saying, “Okay, well, let’s look at what happened last year.” First of all, if you think about manipulation, there’s only one reason in my mind that bankers manipulate things. They don’t manipulate them for the bank to make money. They manipulate them for the employees to make bonuses.

When are bonuses determined? They’re determined June and December, at the end of the month. When did the gold price hit its lows last year? The last trading day of June and the last trading day of December.

If you can accept that it was manipulated, then you therefore would come to the conclusion, “Oh, it has been discovered, so maybe they won’t manipulate anymore.” Where can we go from here knowing that we won’t have this kind of repressive forces on the gold price?

So I think when you look at what has been made public about manipulation and what we have analyzed over the years, the flows of physical metals, which has suggested to us that there’s so much buying of physical metals that the central banks must be active in this market on the sell side not declaring their sales because I honestly think that demand for gold is twice the annual mine supply.

So I think we have lots of exciting things to look forward to in 2014. I think we could see a massive run up in the price of silver and gold, both to new highs and of course the impact on stocks would be incredibly dramatic.

Monday, March 3, 2014

A couple weeks ago, we featured Rick Rule for a discussion on an asset's optionality to the price of gold. This week, we talk to legendary, billionaire speculator and investor Eric Sprott, about a producing asset's optionality to the price of gold...

Eric says he takes a very positive view on where the gold price will go and he is absolutely convinced that gold will go to $2,000 per ounce, probably within the next 12 months. With that in mind, Eric walks our listeners through the concept of investing in a marginal gold producer -- a company that barely scrapes buy at current gold prices, can go up several hundred percent with just a small rise in the price of the metal.

Eric says this is the investment opportunity of a lifetime, happening right now! In fact, we have missed the first 25% already, but there is much more to come.

Eric reminds our listeners that last time around, gold stocks went up by 1700% in about 7 or 8 years, and he thinks that is the kind of move we are looking at. There is no other place where you can find these kinds of returns.

At the end of the interview, we ask Eric what his political views are in light of government policy over the past several years. Watch to find out if Eric is a moderate, libertarian, anarchist, or something else.

Eric Sprott has more than 40 years of experience in the investment industry. After earning his designation as a chartered accountant, Eric entered the investment industry as a research analyst at Merrill Lynch. In 1981, he founded Sprott Securities (now called Cormark Securities Inc.), which today is one of Canada's largest independently owned securities firms. In 2001, Eric established Sprott Asset Management Inc.